VEDANTA LTD 2017-18 Annual Report Analysis

Sat, 31 Mar

VEDANTA has announced its results for the year ended March 2018. Let us have a look at the detailed performance review of the company during FY17-18.

VEDANTA Income Statement Analysis

• Operating income during the year rose 33.0% on a year-on-year (YoY) basis.
• The company's operating profit increased by 30.8% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 30.6% in FY18 as against 31.1% in FY17.
• Depreciation charges decreased by 0.1% and finance costs decreased by 12.7% YoY, respectively.
• Other income declined by 30.1% YoY.
• Net profit for the year grew by 21.0% YoY.
• Net profit margins during the year declined from 16.6% in FY17 to 15.1% in FY18.

VEDANTA Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	682,790	908,090	33.0%
Other income	Rs m	45,820	32,050	-30.1%
Total Revenues	Rs m	728,610	940,140	29.0%
Gross profit	Rs m	212,170	277,590	30.8%
Depreciation	Rs m	62,920	62,830	-0.1%
Interest	Rs m	58,550	51,120	-12.7%
Profit before tax	Rs m	136,520	195,690	43.3%
Tax	Rs m	23,330	58,770	151.9%
Profit after tax	Rs m	113,190	136,920	21.0%
Gross profit margin	%	31.1	30.6
Effective tax rate	%	17.1	30.0
Net profit margin	%	16.6	15.1

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VEDANTA Balance Sheet Analysis

• The company's current liabilities during FY18 down at Rs 672 billion as compared to Rs 827 billion in FY17, thereby witnessing an decrease of -18.7%.
• Long-term debt down at Rs 268 billion as compared to Rs 303 billion during FY17, a fall of 11.5%.
• Current assets fell 28% and stood at Rs 551 billion, while fixed assets rose 9% and stood at Rs 1,245 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 1,797 billion as against Rs 1,915 billion during FY17, thereby witnessing a fall of 6%.

VEDANTA Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	603,450	631,350	4.6
Current Liabilities	Rs m	826,750	672,470	-18.7
Long-term Debt	Rs m	302,550	267,890	-11.5
Total Liabilities	Rs m	1,915,380	1,796,510	-6.2
Current assets	Rs m	767,960	551,140	-28.2
Fixed Assets	Rs m	1,147,420	1,245,370	8.5
Total Assets	Rs m	1,915,380	1,796,510	-6.2

VEDANTA Cash Flow Statement Analysis

• VEDANTA's cash flow from operating activities (CFO) during FY18 stood at Rs 174 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs 154 billion, an improvement of 467.9% on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -393 billion on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs -64 billion from the Rs 83 billion net cash flows seen during FY17.

VEDANTA Cash Flow Statement 2017-18

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-17	Mar-18
Cash Flow from Operating Activities	Rs m	180,830	173,660	-4.0%
Cash Flow from Investing Activities	Rs m	27,110	153,960	467.9%
Cash Flow from Financing Activities	Rs m	-124,250	-392,550	-
Net Cash Flow	Rs m	83,390	-64,090	-

Current Valuations for VEDANTA

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 36.8, an improvement from the EPS of Rs 30.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 278.3, stands at 7.4 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.7 times, while the price to sales ratio stands at 1.2 times.
• The company's price to cash flow (P/CF) ratio stood at 5.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Sales per share (Unadj.)	Rs	183.5	244.1
TTM Earnings per share	Rs	30.4	36.8
Diluted earnings per share	Rs	30.5	36.8
Price to Cash Flow	x	5.8	5.3
TTM P/E ratio	x	15.2	7.4
Price / Book Value ratio	x	1.1	1.7
Market Cap	Rs m	674,808	1,067,082
Dividends per share (Unadj.)	Rs	19.5	21.2

Ratio Analysis for VEDANTA

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 0.8x during FY18, from 0.9x during FY17. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio improved and stood at 4.8x during FY18, from 3.3x during FY17. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 21.7% during FY18, from 18.8% during FY18. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 27.4% during FY18, from 21.5% during FY17. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 10.5% during FY18, from 9.0% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Current ratio	x	0.9	0.8
Debtors’ Days	Days	1	2
Interest coverage	x	3.3	4.8
Debt to equity ratio	x	0.5	0.4
Return on assets	%	9.0	10.5
Return on equity	%	18.8	21.7
Return on capital employed	%	21.5	27.4

To see how VEDANTA has performed over the last 5 years, please visit here.

VEDANTA Share Price Performance

Over the last one year, VEDANTA share price has moved up from Rs 274.7 to Rs 278.3, registering a gain of Rs 3.6 or around 1.3%.

Overall, the S&P BSE SENSEX is up 12.1% over the year.

(To know more, check out historical annual results for VEDANTA and quarterly results for VEDANTA)

Read: Latest Annual Report Analysis of VEDANTA